Brent crude rose to near $111 a barrel this morning as fears of disruption of supply from the Middle East resurfaced amid growing optimism for a revival in demand growth as the world's biggest economies show signs of steady recovery.
A plunge in oil exports from Iraq due to bad weather, a bomb attack on the convoy of its minister for finance, escalating attacks in Syria and an exercise by Iran's navy in the strategic Strait of Hormuz have all revived supply fears. That has helped the market recoup some of the previous session's losses due to large shipments of European gasoline to the United States.
Front-month Brent gained 34 cents to $110.98 a barrel by 04.12 GMT, after settling down 1.1 percent lower, the most since December 17 and below its 100-day moving average of $111.05. US oil rose 58 cents to $94.14.
"If there is any supply side concern in the Middle East, it will reflect in the risk premium and support prices," said Ben Le Brun, market analyst at Sydney-based OptionsXpress. "Those concerns are offsetting the losses we saw in oil on Friday because of a fall in gasoline prices."
Bad weather cut oil exports from Iraq's Basra port to 960,000 barrels per day (bpd) on Sunday from 2.35 million bpd a day earlier, a shipping source said.
"High winds in the Gulf are preventing loaded ships from leaving the port on Sunday," the source said.
Reuters
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